Indian Police Discover Scam ICO

One of the most common ways by which scams in the cryptocurrency world are perpetuated is through ICOs. In 2018, the SEC was even forced to shut down a good number of ICOs for being unregulated or being outright scams.

According to TheNextWeb, just recently, five bookings were made in the Indian state of Gujarat of people connected to a fraudulent ICO called Bitstrades. One of the men, Hardik Zadafiya, who was identified as the founder of the company, was arrested for cheating and criminal breach of trust while four other men also connected are currently on the run.

The Police first got tipped off by a victim of the scam who had been duped of $230,000, while it is believed that there are other victims. As part of the company’s plan to gain the trust of their victims, they reportedly took them on tours of Bangkok and Singapore. The number of people is believed to be about 190 by many have refused to come forward.

“The majority of investors who lost money in the racket are yet to come forward. We hope that following the registration of the complaint, they will provide details of cheating about the accused to the crime department,” an investigating officer says.

Social Proof

When looking into the nature of the scam, it is understandable why the victims might have been convinced. The company had been advertising on CoinMarketCap, which is a respected crypto market tracker. As of the time the story broke, CoinMarketCap was still following the company online. They had also gotten sponsored posts on a number of reputable cryptocurrency news sites.

This would have made the victims have confidence in the authenticity of the firm. It just goes to show that more due diligence needs to be done by repeatable crypto sites before accepting to advertise just any business as some of their visitors will take the presence of particular firm on their site as a stamp of approval.

ICOs, in particular, are tricky to navigate as there are many that are nothing but schemes to get money out of users. It has become so rampant to see fraudulent or poorly organized ICOs that places like South Korea have issued an outright ban on ICOs as a way to protect citizens.

Hopefully, the case will be prosecuted and more measures will be taken to both educate and protect consumers from such a menace.